Harley-Davidson

Question 3. When Vaughn Beals and the leadership team took control of Harley-Davidson through a leveraged buyout, they proceeded to make critical changes to the company. The Productivity Triad was a significant organizational change that altered the company forever.

Describe how you see the change from the perspective of Lewin’s Change Model. Make sure to consider each of the change phases in your discussion.

According to Lewin’s model, there are three distinct stages of organizational change: unfreeze, change and refreeze. At the “unfreeze”ť stage, existing status quo of the organization is eliminated, and current organizational values, beliefs and culture are challenged. At the “change”ť stage, new directions and methods are adopted; communication and empowering people to act are critically important at this stage. Finally, at the “refreeze”ť stage new equilibrium is reached, and new values are anchored into the organizational culture. This is the stage of reinforcing new behaviors, so during “refreeze”ť rewards and incentives are implemented; at this stage changes of organizational culture occur, and feedback systems are necessary to reach a stable position.
These stages can be clearly traced in the history of Harley-Davidson company when Vaughn Beals and the group of managers organized the buyout of the company and started their Productivity Triad.

The “unfreeze”ť stage started when workers were empowered to participate in the quality control processes. Quality circles were formed to address the problems of slow inventory turnover, low quality and the resulting financial losses. When all workers were able to see and understand the relationships between sales, products and overall profitability, it became possible to determine the causes of the company’s fails and to motivate the personnel to strive for changes.

At the “change”ť phase such innovations as just-in-time inventory practices and statistical operator control were introduced. New system of managing inventory allowed to increase inventory turnover from 2 times per year to 17 times per year. The use of statistical control allowed to detect causes of quality problems. At this stage, Harley-Davidson also gained tariff protection from the US government.

At the “refreeze”ť stage the achievements of the company had to be reinforced. At this stage various employee incentive programs were launched; specifications developed during the previous phase were formulated and new instruments allowing to track conformance of the manufacturing process with these specifications were developed. At the same time, the company petitioned the US government to lift tariff protection in 1987, although they could use this benefit for 1 more year. The “refreeze”ť stage was also characterized by the growth of Harley-Davidson’s revenues in the US, increase of market share in the heavyweight segment and rise of international revenues by 1.7 times. In the “refreeze”ť stage various new programs and innovations were also implemented, but the new organizational culture of excellence and improved values were already incorporated into the Harley-Davidson’s company.

Question 4. What is the “Harley Mystique?”ť
Harley-Davidson managed to combine successful design and power of their motorcycles with effective marketing. The “mystique”ť of Harley-Davidson production is in the great brand loyalty which was extreme in the 1950s, and even nowadays there are thousands of Harley-Davidson owners who associate themselves, their image and lifestyle with these famous motorcycles. The “American manufacture and character”ť of these machines, together with their very specific “voice”ť, form the image of raw power. Marketing strategy described these motorcycles as attribute of tough people, living on the edge. Later on it became associated with the frontier spirit of the US, and became “a part of the American iconography”ť along with US national flag and the American eagle.
Thus, Harley-Davidson managed to transform their motorcycles from utilitarian means of transportation into a powerful driver of lifestyle and a way of expressing individuality. In fact, these motorcycles became the symbol of the truly American style of living, and it is not surprising that target audience of Harley-Davidson ”“ bikers, military people, young men and people willing to show their tough individuality ”“ were so keen on these motorcycles that they even tattooed the logo of Harley-Davidson on their bodies.

Question 5. Did AMF understand this powerful brand reality?
In my opinion, AMF did not understand the reality of Harley-Davidson brand, and instead of strengthening the existing competitive advantage, AMF in fact ruined it, and tried to imitate the advantages of Japanese motorcycles. Since Japanese motorcycles were marketed for a totally different segment ”“ older males, younger females and people who did not want a “tough”ť machine ”“ and had totally different characteristics, it was a mistake to try to convert a totally different brand into something that would be able to compete with these models.

Although AMF CEO stated that “there was a motorcycle craze”ť and suggested that it was possible to sell any motorcycle, the reality appeared different, and it turned out that without understand brand reality, it is hardly possible to manufacture and advertise even the Harley-Davidson motorcycles.

Question 6. How did AMF help or hurt the Harley Mystique?
I believe that AMF has practically ruined the Harley Mystique, or at least significantly hurt it. First of all, Harley-Davidson motorcycles were featured products, and they matched the character and individuality of Harley-Davidson customers. It was a mistake to advertise these products along with the other AMF leisure products, since it was a unique brand, with unique target audience.
The second mistake was the rush for expanding production at the sake of quality. One of the aspects which formed the reputation of Harley-Davidson was its high quality and reliability characteristics. Customer interest to these products has further declined, and the aura of Harley-Davidson mystique was significantly damaged.

The final error AMF did was when they changed the approach to advertising and omitted the advertising outlets with insufficient “high-tone”ť image. In this way the strongest segment of Harley-Davidson market was affected ”“ the motorcycle owners used to tinker with their own engines. Instead of diversifying in order to increase Harley-Davidson market share, AMF lost the major competitive advantage and as a result the market share of Harley-Davidsons at the motorcycle market reduced by 80%.